Big winners in ISR Capital’s bid for rare earths asset
ISR Capital said today that it has agreed to acquire REO
Magnetic’s remaining 40.1% stake in Tantalum Holding (Mauritius) for $26.73
million.
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Leu Siew Ying, The Edge Markets
01 July 2016
ISR Capital said today that it has agreed to acquire REO Magnetic’s remaining 40.1% stake in Tantalum Holding (Mauritius) for $26.73 million.
On June 9, ISR Capital agreed to buy a 19.9% stake in Tantalum Holding (Mauritius) for $13.3 million from REO Magnetic. ISR Capital will pay for the 19.9% stake and the 40.1% stake by issuing new shares to REO Magnetic at 10 cents each. Tantalum Holding (Mauritius) owns a company in Madagascar that holds a permit to explore and develop a rare earths concession.
REO Magnetic, a privately-held investment holding company, agreed to buy a 60% interest in Tantalus Holding (Mauritius) for only €3.7 million ($5.53 million) on December 8 from company called Tantalus Rare Earths, whose shares trade over-the-counter in Dusseldorf. REO Magnetic was called Apphia Minerals SOF at the time.
Now, with the sale of its 60% interest in Tantalum Holding (Mauritius) to ISR Capital for a total of $40.03 million, REO Magnetic looks set to pocket a gain of some $34.5 million, assuming shares in ISR Capital trade at 10 cents. The largest shareholder of REO Magnetic is an individual named Jonathan Lim Keng Hock, who holds a 38.1% stake.
REO Magnetic and Lim aren’t the only players in ISR Capital’s recent corporate moves to have quickly made money. On May 9, an individual named David Rigoll bought 265.4 million shares in ISR Capital at just 0.5 cent per share. That gave him a 28.5% stake in the company, based on the 931 million shares in issue at the time.
The shares were sold to Rigoll by Premier Equity Fund Sub Fund G, which is managed by a firm called Value Capital Asset Management. The shares had been obtained by the VCAM fund from convertible bonds issued by ISR Capital.
Rigoll went on to acquire further shares in ISR Capital from the VCAM fund as more bonds were converted. By June 13, Rigoll was holding 426.7 million shares in ISR Capital, or 28.56% of the 1.49 billion shares in issue. He was appointed non-executive director of ISR Capital on May 16, and executive director on June 16.
Shares in ISR Capital are now trading at almost 19 times the price Rigoll paid the VCAM fund. On the other hand, the 0.5 cent per share that the VCAM fund sold the shares to Rigoll was 25% more than the conversion price of 0.4 cent. VCAM is owned by an individual named John Poon Seng Fatt.
What happens now? Upon completion of the transactions with REO Magnetic, ISR Capital will hold a 60% stake in Tantalum Holding (Mauritius). The remaining 40% is held by Tantalus Rare Earths. REO Magnetic has an agreement with Tantalus Rare Earths to buy this remaining 40% stake. It will pay for it with shares in a Singapore-listed company worth €10 million.
It is unclear if REO Magnetic will subsequently sell this 40% stake in Tantalum Holding (Mauritius) to ISR Capital.
ISR Capital said on July 1 that it will seek the approval of its shareholders for the acquisition of the 40.1% stake in Tantalum Holding (Mauritius). It added that Empire Capital Partners has been appointed as corporate advisors for the acquisition. The Australia-based boutique corporate advisory firm is to lead and manage a fund raising exercise for up to $30 million, according to ISR Capital.
Empire Capital Partners was incorporated only on October 29, 2013, according to filings with the Accounting and Corporate Regulatory Authority. It is wholly-owned by a Malaysian named Marvin Yee Yen Tuck, who has an Auckland address.
ISR Capital closed at 9.4 cents on Friday.